T1. 3 Doyle Ch 1 Pg 1 - 2 Flashcards
What are the two types of users of accounting information?
Internal and External users.
Who are the external users of accounting information?
Shareholders (owners of proprietary and public companies).
Potential investors.
Creditors (banks and suppliers).
Employees.
Australian Taxation Office (ATO).
Who are the internal users of accounting information?
A: Business managers, sole proprietors, and partners in a business.
What are the two main types of accounting?
Management Accounting and Financial Accounting.
What is Management Accounting?
Preparation of accounting reports for internal users (business operators).
What are examples of Management Accounting information?
Cost of manufacturing.
Breakeven point of a product.
Expected cash at bank balance for the next 12 months.
What is Financial Accounting?
Preparation of accounting reports (e.g., balance sheet) for external users.
How are accounting reports divided?
Into external and internal reports.
What are the types of external accounting reports?
Statement of Profit or Loss & Other Comprehensive Income – Shows income, expenses, profit/loss, and asset revaluation over a period of time.
Balance Sheet (Statement of Financial Position) – Shows assets, liabilities, and equity at a specific date.
Statement of Cash Flows – Shows changes in cash balances over a period of time.
Statement of Changes in Equity – Shows changes in equity items over a period of time.
What are internal accounting reports?
Reports prepared for business managers and not shared with external parties.
Give an example of an internal accounting report.
budget
What is a budget in accounting?
A plan for the future of a business expressed in money terms.
